CURIOUS ABOUT WHEN LEADERS LEAD, WHEN THEY FOLLOW AND WHEN THEY HIDE.

LEADERSHIP V MANAGEMENT

I have always had a preference for policy and process over personality and an affinity for good management (helping people, process, production, profit and planet) over leadership which is often about celebrity and wealth, with pronouncements and announcements based on oratory rather than delivery.

However, I recognise and accept that this is a minority view and there current zeitgeist is about vision and mission, dreams and ambition, attitude and advice, rather than discourse and delivery, action and accountability.

So accepting that leadership is where it is at, I am curious about when leaders lead, when they follow and when they hide.

I have been in meetings with very senior people, mostly CEOs, who seem unable to articulate their strategy and plans for implementation, or even metrics to focus resources and effort and measure progress and performance.

Too often they seem to want to be directed, by government, by the Board, by the shareholders although seldom by the customers or the staff. I am supportive of discussion prior to decision and delivery, but surely it is incumbent on the leaders to promote and provoke the discussion rather than wait for direction.

THE "AGENCY EFFECT" OR "AGENCY THEORY"

The principal is an individual or organization that delegates work, and the agent is the one who performs the work. The relationship can often be found in situations where the owner of a company (the principal) hires a manager (the agent) to run the company on their behalf.

The agency effect can have several implications on management and leadership:

1. Alignment of Interests: The biggest challenge in the principal-agent relationship is aligning the interests of both parties. The principal is interested in the overall success of the organization, while the agent may be more concerned with their personal gain, such as salary, job security, or professional reputation. To mitigate this, incentives can be designed to align the agent's interests with those of the principal, such as performance-based bonuses or stock options.

2. Risk Preference Mismatch: Often, principals and agents have different risk preferences. Principals might want agents to pursue risky ventures that could bring high returns, while agents may prefer safer options that ensure their job security and steady income. This can affect decision-making and strategic planning.

3. Information Asymmetry: There's often a discrepancy in the information available to principals and agents. Agents, being on the ground, have more detailed and timely information, while principals have broader, though potentially delayed, information. This can create situations where agents manipulate information to their benefit, impacting decision-making and transparency.

4. Monitoring Costs: Principals often incur costs in monitoring the activities of agents to ensure they're acting in the best interest of the organization. These costs can include implementing control systems, conducting audits, or hiring additional supervisory staff.

5. Moral Hazard: This refers to the situation where an agent takes risks because the negative effects will be borne by the principal. This can result in reckless behavior by the agent, if they believe they won't suffer the consequences of their actions.

BROADER APPLICATION

The above is set in the context of company (the principal) hires a manager (the agent) but what if “the principal” is society or policy and “the agent” is an organisation, business, quango or voluntary body.

Do leaders ostensibly become managers, awaiting a sign before making suggestions? Are they simply players on a stage awaiting direction?

William Shakespeare's play "As You Like It," specifically the monologue from Act II, Scene VII. The character Jacques speaks these lines:

"All the world's a stage, And all the men and women merely players; They have their exits and their entrances, And one man in his time plays many parts, His acts being seven ages."

This famous quote is a metaphor comparing the world to a stage and life to a play, suggesting that we all have roles we play throughout our lives.

FRUSTRATION

This observation is borne from a frustration of very senior people to be willing to grapple with difficult issues, engage in necessary dialogue, make decisions and deliver. Instead too often they are like a celebrity actor waiting for someone to prompt them with Q-cards on the next line of the script and eager that their character is seen as central to the plot.

In this context I welcome the humble manager who simply knows what needs to be done and gets on with it, rather like a stage-hand.